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b. What deficiencies exist in the client's internal controls? c. What substantive audit procedures are likely to uncover the for 11-9 L04 Following is a

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b. What deficiencies exist in the client's internal controls? c. What substantive audit procedures are likely to uncover the for 11-9 L04 Following is a list of controls in the acquisition and payment cycle for inventory and cost of goods sold. Match each control w following activities in this cycle: (1) requisition for goods and services. Review Questions and Short Cases 623 (2) purchase of goods and services, (3) receipt of goods and services, (4) approval of items for payment, and (5) cash disbursements. a. The receiving department electronically scans bar codes on the goods received to record quantity and visually inspects for quality. b. Computer generated purchase orders are reviewed by the purchas- ing department. Management approves contracts with suppliers. d. Management reviews payments and compares them to data such as production budgets. Management requires competitive bids for large purchases. An individual in a position of authority reviews the complete- ness of supporting documentation prior to signing a check for payment. 8. A policy exists and is enforced whereby purchasing agents are rotated across product lines. h. A requisition form is forwarded to the purchasing department by a supervisor i. A policy exists and is enforced whereby employees cannot pur- chase from vendors outside an authorized vendor database. j. Controls exist to ensure that only authorized goods are received. k. Controls exist to ensure that goods meet order specifications. 1. The receiving department prepares prenumbered receiving docu- ments to record all receipts. m. A three-way match is made between the invoice, the purchase order, and the receiving report. n. Limits on the purchase of inventory can be exceeded only on spe- cific approval by a manager. 0. Supporting documentation is canceled on payment to avoid dupli- cate payments. p. Management monitors inventory and purchase levels. q. Vendor disputes about payments are handled by individuals out- side the purchasing department. r. An agreement exists with the supplier whereby the supplier agrees to ship merchandise (just in time) according to the production schedule set by the manufacturer

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